Survival Strategy #2
Negative gearing is the dumbest idea…especially in the coming 5 to 10 years where we can’t rely on big citywide growth any more. An oversupply of stock coming onto the market will hold back growth in many, many areas… so taking a known annual loss, as a bet on the prices moving is a pretty dumb idea right now.
You can use positively geared property to not only pay for themselves and give great capital gains because of site selection (and they also give huge tax deductions).
A property with positive cash flow and $15,000/year in tax deductions is very achievable…and remember, the deduction is a guaranteed return. Just like the debt reduction strategy we discussed last time, minimising tax (which is Strategy #5) can give you exceptional guaranteed returns AND increase your weekly cash flow.
If you have 4 properties like this legally minimizing your taxable income, that’s a massive reduction in your tax bill. If you are in the top two tax brackets, tax is pretty painful subject for you. However, with the right strategy, were you aware that you could potentially add the value of your salary to a property portfolio every year?
So, if you’re making $180,000, you could have over $900,000 in property added to your portfolio in 5 years.
Best of all, you can usually do that without sacrificing your lifestyle.
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